Things are going so well at LINN Energy (OTC:LINEQ) that it just couldn't wait until the new year to share its progress this quarter. That's why the company put out a press release just to let investors know that it is having a terrific fourth-quarter. That's not all LINN had to say, so let's take a closer look.

Steady production
LINN Energy expects its fourth-quarter production to be right on target and land somewhere between 840-860 million cubic feet equivalent per day, cfe/d. However, what's important here is that the company expects to hit these numbers despite being affected by the severe winter weather that hit the Permian Basin and Mid-Continent this quarter. Investors might remember that LINN's production and earnings were actually negatively affected by the weather during this year's first quarter.

Not all companies operating in the region were able to get by without lowering production guidance. Pioneer Natural Resources (NYSE:PXD), for example, issued a press release of its own noting that the same severe weather had a negative impact on its production and drilling. Because of this, Pioneer expects that it will need to issue new lowered guidance once it knows the extent of the damage. The reason LINN's production wasn't affected to the same degree as Pioneer's is that it made up for the production shortfall by exceeding expectations in its drilling program.

Better cash flow
While reiterating its production guidance is nice, the real news is that LINN expects its cash flow to be 5%-10% above its distribution. That's a lot better than the previous expectation, which had LINN paying out every dime it made to investors. Basically, this means that LINN's distribution coverage ratio will be up to 1.10 times on the quarter instead of 1.0 times. It's also well above the worrisome first quarter showing of 0.88 times that started its year off on the wrong foot.

Two factors have contributed to the excess cash flow this quarter. LINN is seeing better realized prices for its natural gas liquids, while its operating expenses are falling. The one-two punch of higher prices and lower costs is the perfect recipe for higher profits and exceptionally strong distribution coverage.

Merger update
LINN's great fourth-quarter could be even better, as it expects to close its merger with Berry Petroleum (NYSE: BRY) before the end of the year. The LinnCo (NASDAQ: LNCO)-led deal isn't factored into the quarter's guidance, so it's quite possible LINN exceeds these raised expectations before all is said and done.

The deal heads for a final investor vote on Dec. 16, and is expected to close immediately after that vote. Once the deal closes, the combined entity will emerge as a stronger company, as the Berry deal improves LINN's exposure to liquids, debt metrics, and reserves.

Investor takeaway
LINN Energy's year started off on the wrong foot after its poor first quarter showing. However, the company battled back and is poised to end the year on a good note. With the Berry merger nearing completion, 2014 looks exceptionally bright for LINN Energy.

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